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Copyright Royalty Board unleashes new royalty rates for internet radio and streaming music

Delayed five months by Covid, the U.S. Copyright Royalty Board (CRB) released its new government-regulated royalty rates for the use of recordings in non-interactive streaming. This every-five-year exercise in setting statutory royalties is a crucial business factor for commercial and non-commercial companies which stream music to American audiences. That includes big operations like Pandora and AccuRadio, indie-station aggregators like Live365, and radio stations which simulcast their programming online.

There are two key numbers:

  • the fee per stream/user. This number, always a fraction of a penny, is what a streaming company must pay to deliver one stream to a single user.
  • the minimum fee, paid upfront at the start of each year, is both a minimum and a down payment on actual fee calculations that happen through the year.

The per-stream fee is now $.0021 for non-subscription streaming (think Pandora’s free service), up from $.0018 last year — a 16% raise.

The minimum fee is $1,000 per channel, up from $500 in the previous royalty cycle. for entities containing more than 100 channels, the minimum is capped at $100,000, up from $50,000.

These fees cover the 2021-2025 period, are subject to potential cost-of-living adjustment during that term, and apply only to the type of streaming regulated by the CRB, which is defined by three conditions:

  • Non-subscription listening plans: Listening environments that are unpaid-for by the listener, as opposed to subscription services joined with a subscription fee.
  • Non-interactive streaming, or passive listening, where the listener has no choice, or limited choice, of song sequences.
  • Music streaming whose payment rates for the use of recordings is not determined by private, negotiated agreement.

A separate rate pertains to subscription-service streams, and it is $.0026 per stream/user.

Royalties are paid to SoundExchange, the government sanctioned organization for the collection and distribution of royalties.

This iteration of the CRB process is nicknamed Web V, and follows four previous cycles that began in 2005. The CRB decision is formally calledĀ Web V Determination. The headline numbers represented here come out first, and they were released late Friday. Some weeks from now the CRB will follow precedent and release a statement of reasoning — a document that summarizes arguments made by participating parties during a legal lead-up to the determination, and presents the CRB rationale for its judgment. The Copyright Royalty Board is a three-judge bench.

The Web IV Determination in December, 2015, setting rates for 2016-2020, was tectonic for small webcasters. Along with rate escalation, the expiration of the Webcaster Settlement Act of 2009, which provided reduced royalties for small webcasters, caused a generalĀ  wipeout in the amateur and semi-pro internet radio landscape. That fertile niche of the industry has recovered to some extent, thanks to aggregator platforms which can monetize a large inventory of advertising across hundreds or thousands of stations.

(Thanks to David Oxenford for quick notification of the CRB rate release. David Oxenford is the leading broadcast/streaming law attorney in the country, a RAIN Summit speaker, and guest columnist for RAIN News. Follow his Broadcast Law Blog HERE.)

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Brad Hill

4 Comments

  1. Rates up 18-20% on rates that ALREADY made it impossible to create a
    profitable streaming service.

    It’s a huge loss for iHeart and Google who were campaigning for a new
    non-interactive tier for their simulcasts (FM) and audio devices
    (Google Home).

    Radio is in huge trouble. The world is going digital and there’s
    simply no way for that to be a viable (read: profitable) business.

  2. Disagree. It is not impossible to be a profitable streaming service. Yes, radio is going digital but that just gives it a wider audience. It is no longer costrained by limited AM/FM bands.

  3. There is a simple way for radio to remain competitive — add video (see US patent 8,560,718). After all, TV is radio with pictures; adding video to radio creates digital TV. Doing so in real time allows a station to sell more valuable audiovisual ads using its Nielsen ratings.

  4. Internet Radio, is broadcast over the internet, and SAM Broadcaster shows you how many listeners are listening at any given time. Whether your on the air live or not. The issue has been for years, the rates in which Internet Radio was charged the same as terrestrial broadcasts. Even though FM/AM is Market Share (based on how many people live in that Market). Internet Radio has Actual Numbers. And using SoundExchanges rates back in 2009, I figured out what it cost ME to do my 3 hour show 4 times a month, and that was $5.35 a month total listening hours just for MY show. And I would have been happy to pay that. The Company that my friends station was using to pay Royalties was shut down. So we shut down. That was 2012, last time I did a show.

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